Good: really sharp, but comfortable, chassis, excellent interior, improved styling, space, quality

Not so good: engine a little noisy, very pricey in this spec

I remember the near-hilarity experienced by many of us grizzled, veteran car testers when the first-generation BMW X3 hove into view. We'd, unexpectedly, loved the bigger X5, but this compact SUV looked appalling (it was Bangle's worst styling job, no question) and, while it steered OK, it rode like it had bricks holding up the wheels. It was not a good car.

The second generation model was a big improvement, but still lacking a bit in the style stakes and, if you fitted it with the optional sports suspension, the ride became so unyieldingly hard that it was positively horrid around town. Plus, the cabin was a bit on the cheap side.

Which brings us, neatly, to this, the third generation BMW X3, or 3X3 if you like, which has rather a lot to do. First and foremost, it has to be a big, big improvement on its somewhat mediocre predecessors. More importantly, it has a serious job of work to do competing in a fast-expanding premium SUV sector and, no matter how good it might be, it's going to have its hands full with the likes of the Audi Q5, Volvo XC60, Mercedes GLC, Lexus NX, Jaguar F-Pace and other rivals such as the new Honda CR-V and the incoming new Hyundai Santa Fe. It's a tough world out there for a mid-size SUV right now.

Doubly tough because, to be honest, we're suffering badly from multiple SUV fatigue. Every car maker is launching a new SUV every five minutes, or so it feels, so the X3 stands in danger of getting lost in the white noise.

It probably doesn't help that it looks both so familiar and so much like the smaller BMW X1 at the front. Not that it's bad looking, mind you. In fact, in the nice dark metallic blue of our test car, I'd say it's really rather handsome. Its proportions are better-balanced than those of the X1 and its detailing and general styling are both far better resolved than those of previous X3s. Actually, it's pretty good looking, if a touch generic in places.

There's better news, by far, on the inside. The old X3s robbed liberally from the BMW 1 Series and 3 Series parts bin for their cabins and could, at times, feel a bit cheap and nasty inside. Not so this one, which seems to lift more from the 5 Series than from anything else. That means you've got a seriously good-looking cabin with genuinely exceptional quality and build. If you thought Audi had a monopoly on interior design, fit and finish, think again. The X3's interior really is that good. You could quibble with the digital dials, which, constrained by physical half-rings, are not as flexible as the Audi Virtual Cockpit display, but really, that's a pretty minor complaint. They do look good, it must be said, and the iDrive system for the broad, shallow, central touchscreen remains the best in the business - simple, easy to use and fast.

There's more. Comfort in the front is first class, space in the back is decent, and the 550-litre boot is practical.

But how does it drive? This is, after all, an M Sport model (which means bigger wheels and stiffer springs) and the X3's ride quality has always been its Achilles heel. Well, no longer. The X3 is firm, no question of that, but it manages to concede just enough flex and movement to cope with the road surface without upsetting the cabin occupants. Really sharp urban humps can make it through a bit unfiltered, right enough, but that's true too for most rivals, so we'll let the X3 have a bye here. The familiar 2.0-litre turbodiesel engine, with its on-par 190hp and 400Nm of torque, is willing and has decent (35-40mpg in daily driving) economy, but it can be a bit noisy at times, which is a shame, but sadly not out of line with most of its rivals.

Arguably more importantly, the X3 feels like a proper BMW when it comes to driving it on the open road. The steering isn't a model of feedback and feel, but it has spot-on weighting and accuracy, feels great in your hands and directs the blunt nose with more than a little alacrity. There's scant enough body roll (by SUV standards) and the X3 displays a properly BMW-style attitude to cornering and country roads. It's actually really quite good fun, and far more alive and agile to drive than anything else in the segment bar perhaps the Jaguar F-Pace. Would you be having more fun in a 5 Series Touring? Yes, probably, but probably not much...

You might cut more of a dash in a BMW X5, though, and it's worth pointing out that our X3 test car was optioned up to a massive €75,431, brushing uncomfortably close to the hem of the X5 price list, which is altitude-sickness territory for a car such as this.

Still, I don't think there's much question that this is the best BMW X3 ever, and might just be the best current car in its class. Certainly it's the most engaging to drive, it has a fantastic cabin, looks better than before and perhaps just needs a slightly quieter engine to score that full five-star rating.